What is the company wacc

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Dobson Dairies has a capital structure consisting of 60% debt and 40% common stock. The company's CFO has obtained the following information:

The before-tax YTM on the company's bonds is 8%.

The company's common stock is expected to pay a $3.00 dividend at year end (D1 = $3.00), and the dividend is expected to grow at a constant rate of 7% a year. The common stock currently sells for $60 a share.

Assume the firm will be able to use retained earnings to fund the equity portion of its capital budget..

The company's tax rate is 40%.

What is the company's WACC?

a. 12.00%

b. 8.03%

c. 9.34%

d. 8.00%

e. 7.68%

Reference no: EM131587988

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